{"id":1004068882,"date":"2013-03-16T09:33:47","date_gmt":"2013-03-16T17:33:47","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004068882"},"modified":"2022-12-08T02:37:02","modified_gmt":"2022-12-08T10:37:02","slug":"prea-special-report-housing-still-surest-bet-in-cre","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/prea-special-report-housing-still-surest-bet-in-cre\/","title":{"rendered":"PREA Special Report: Housing Still Surest Bet in CRE"},"content":{"rendered":"

By Anna Spiewak, News Editor<\/em><\/p>\n

\"\"<\/a>

David Rubenstein of The Carlyle Group speaks of housing being the most prolific CRE investment.<\/p><\/div>\n

Despite construction costs on the rise and financing still not being up to par to pre-Great Recession times, real estate is still the soundest investment of today and tomorrow, according to commercial real estate high rollers who spoke at Pension Real Estate Association\u2019s 2013 Spring Conference in Washington, D.C.<\/p>\n

\u201cReal estate is a great investment, if you have real estate expectations, it\u2019ll raise returns,\u201d said David Rubenstein, chairman & founder of The Carlyle Group during the earlier part of the first part of the two-day conference taking place March 14-15. \u201cReal estate does not appreciate at 20 percent a year, but if you love to touch and feel the asset and you want something that has some stability to it and you\u2019re happy with the rate return that is realistic, at about 15 percent, I think real estate is universally good to invest in.\u201d<\/p>\n

As for which category of commercial real estate is best to put your money in going forward — housing still takes the cake. There is a perceived shortage of housing in the United States today, as no new development has gone up the last couple of years, and yet the population continues to drastically grow, to 315 million in 2013, up by 2.2 million from the year 2010, according to the Census Bureau, which predicts that number to increase to 400 million by 2050.<\/p>\n

\u201cApartments have the lowest lease structure, but also have the lowest cap rates and low cap rates are very important,\u201d said Ken Rosen, chairman of Rosen Consulting Group, a real estate market research firm, and one of the three conference co-chairs, adding that low interest rates are very positive for those struggling to get credit.<\/p>\n

During the Multi-Family Investment session portion, Mike Kirby, chairman & director of Research at Green Street Advisors agreed that \u201chousehold formation is perking up,\u201d and job growth numbers are encouraging, adding to the fact that apartment demand will remain strong.<\/p>\n

According to panelists, the dream of home ownership has not gone, but simply slowed down, as rent growth has peaked. The average apartment rent increased by 4.1 percent in 2012, and is predicted to increase by 4.6 percent this year, according to National Association of Realtors\u2019 fourth-quarter report.<\/p>\n

Ken Rosen brought up the latest Fannie Mae Monthly National Housing Survey, which reflects that \u201cpeople under the age of 35 don\u2019t have their lives settled yet.\u201d Many of them cannot afford putting down a downpayment on a house or a condo, because generation X and Y are stricken with the burden of student debt.<\/p>\n

\"\"<\/a>

There is hope yet for the U.S. RE market.<\/p><\/div>\n

\u201cThey don\u2019t think it\u2019s a good investment, they have a dream, but there\u2019s restraint,\u201d Rosen added.<\/p>\n

While multi-family investment was the highlight topic during all of the panels, the subject of student and seniors housing was glazed over as well. According to Kirby, student housing has especially been a profitable business, especially for American Campus Communities.<\/p>\n

\u201cLots of people have kids in college and the places they live in are run down, lots of these places are getting replaced,\u201d he added.<\/p>\n

Similarly, the senior sector is seen as generating \u201cexcellent growth\u201d while supply remains fairly low.<\/p>\n

During the Urban Investment session, panelists differentiated between Manhattan and the rest of the world,\u201d only mentioning San Francisco as a possible contender for an urban high yield investment.<\/p>\n

\u201cAlthough society reflects a desire to stay urban \u2026 there are few places where urban investment works,\u201d said Jeff Blau, CEO of Related Cos. \u201cThe wealth is there, but there\u2019s not enough population, it gets limited quick.\u201d<\/p>\n

Panelists gave most credit of their successful urban investments to luck and to Mayor Bloomberg for being development-friendly, overhauling zoning and planning rules to allow New York skyscrapers to soar. Most recently, under Bloomberg\u2019s push, the Department of City Planning proposed a zoning strategy for 78 blocks of the East Midtown office area centered around Grand Central Terminal and generally located between Fifth and Second\/Third avenues, and East 57th and East 39th streets with Park Avenue as its center, according to DCP\u2019s website. Despite Bloomberg\u2019s run coming to an end and a New York\u2019s mayoral election around the corner, the real estate moguls remain positive about the future of urban investment.<\/p>\n

\u201cThere won\u2019t be another mayor like Mr. Bloomberg, but we\u2019re hopeful the next person won\u2019t take us backwards,\u201d said Michael Fascitelli, president & CEO of Vornado Realty Trust, clarifying that he hasn\u2019t officially retired just yet.<\/p>\n

While economy and politics were the highlight topics at the conference, and several voiced concerns over investing less during hard times, and appropriately for being in the country\u2019s capital, took pot shots at the government, calling it \u201can easy target,\u201d the majority remain hopeful about CRE\u2019s future, seeing the country three fourths into recovery mode now, and out of the recession, reflective of the recent spike in job growth, nearly 200,000 jobs were created in February, according to ADP.<\/p>\n

\u201cInterestingly that as things as the sequester started getting on the horizon, and all the craziness that goes on down here (referring to Washington, D.C.), the private sector actually picked up the pace,\u201d said Rosen, adding that \u201cthe fed will be late to the party, behind the curve, but once they get in, it\u2019ll get done,\u201d referring to government\u2019s role in economic recovery.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Despite construction costs on the rise and financing still not being up to par to pre-Great Recession times, real estate is still the soundest investment of today and tomorrow, according to commercial real estate high rollers who spoke at Pension Real Estate Association\u2019s 2013 Spring Conference in Washington, D.C.<\/p>\n","protected":false},"author":952,"featured_media":1004068887,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21808,21754,11,21742,1615],"tags":[],"class_list":["post-1004068882","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-medical-office","category-midatlantic","category-latest","category-washington-dc"],"acf":[],"yoast_head":"\nPREA Special Report: Housing Still Surest Bet in CRE - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/prea-special-report-housing-still-surest-bet-in-cre\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"PREA Special Report: Housing Still Surest Bet in CRE\" \/>\n<meta property=\"og:description\" content=\"Despite construction costs on the rise and financing still not being up to par to pre-Great Recession times, real estate is still the soundest investment of today and tomorrow, according to commercial real estate high rollers who spoke at Pension Real Estate Association\u2019s 2013 Spring Conference in Washington, D.C.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/prea-special-report-housing-still-surest-bet-in-cre\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2013-03-16T17:33:47+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-12-08T10:37:02+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2013\/03\/IMAG1187.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"431\" \/>\n\t<meta property=\"og:image:height\" content=\"361\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Anna Spiewak\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/prea-special-report-housing-still-surest-bet-in-cre\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/prea-special-report-housing-still-surest-bet-in-cre\/\",\"name\":\"PREA Special Report: Housing Still Surest Bet in CRE - 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